Ask Terry Questions Chicken Money Investments

Chicken Money Investments

By Terry Savage on December 19, 2017 | Chicken Money

My wife and I enjoyed your talk at Northeastern University on Oct 24th. You have said not to invest in bonds for my chicken money, but does that also include, for example, the Vanguard Total Bond Market Index fund (VBTLX)? I have considered this for money to cover the next 2 to 9 years. Money not needed for 10+ years, I am considering the Vanguard Total Stock market Index (VTSAX). If not these, what would be better alternatives? Thankyou

Terry Says

There's nothing wrong with having a balanced, long term portfolio that includes both stocks and bonds.  And a diversified fund -- for either stocks or bonds -- is the easiest way to do that.  My point is that you might have to sell part of your portfolio  -- either for required minimum distributions or for a spending emergency.  And that sale could come at a bad time, with either stock or bond prices in a decline.  That's the purpose of "chicken money" -- short term "cash in the bank" type investments.  You don't get rich, but you don't get poor! Having some chicken money let's you sleep better at night when the market is moving against you, knowing you have cash and aren't forced to sell investments at a loss.



a personal
finance question